Obsidian Energy Ltd.

Q1 2025 production was 38,400 BOEs/d, up 12% year over year. Capital expenditures were $128 million versus $114 million last year, decommissioning expenditures on ARO were $6.6 million, operating costs were $1,572 per BOE versus $1,391 last year, G&A was $1.61 per BOE versus $1.77 last year, and netback was $33/BOE versus $33.40/BOE last year. Funds flow from operations was $100 million, up 19% year over year and 25% per share; free cash flow was negative about $35 million, and debt rose to about $460 million from $411 million at year-end. The Pembina sale closed for $320 million total consideration, and management said the company expects Q2 2025 production of 28,800 to 29,600 BOEs/d, capex of $37 million to $42 million, FFO of $60 million or $0.86/share at $60 WTI, positive free cash flow of $16 million, and quarter-end debt of about $255 million, or about 1.1x debt to FFO annualized.

Stephen Loukas said the company’s strategy has not changed: maximize shareholder value through production growth, debt reduction, and buybacks, but he argued that at $60 oil it does not make sense to force growth or “burn inventory” when the stock can be repurchased at what he called a material discount to intrinsic value. He framed the Pembina sale as a value-maximizing, portfolio-streamlining move that strengthens the balance sheet and gives management more focus on Peace River and Willesden Green. His tone was confident and direct, emphasizing flexibility, balance-sheet strength, and capital discipline over headline growth.

Peter Scott highlighted the quarter’s operating profile: production up 12% YoY to 38,400 BOEs/d, FFO up 19% to $100 million, and G&A down to $1.61/BOE from $1.77/BOE. He said higher operating costs were mainly due to Peace River activity, water handling, and some land survey costs tied to the Pembina disposition, while lower power costs helped offset that. On the balance sheet, he pointed to about $460 million of debt at quarter-end, the expected drop to about $255 million by Q2 after the sale, and liquidity backed by the $235 million credit facility with only about $30 million drawn post-closing; he also noted the company still has $112 million of bonds outstanding.

Analysts focused heavily on capital allocation after the Pembina sale, asking how Obsidian would balance debt paydown, buybacks, reinvestment in Peace River, and the 9.1 million in-play shares. Management said cash proceeds were used to reduce debt, buybacks were accelerated in April, the second-half capital plan was cut, and the company is comfortable prioritizing repurchases over growth at current prices. Questions also covered underperforming Peace River wells, where Jay McGilvary said some Cadotte wells encountered higher-than-expected viscosity and are currently shut in while mitigation options are evaluated, and the company’s reduced drilling plan, which management tied to both prices and capital discipline.